Investment vs. Human Rights Protection: A Call to Reform International Trade Power Relations

September 24, 2015

WILPF is actively advocating during the current session of the Human Rights Council (from 14 September to 2 October) to strengthen the prevention and accountability of corporate human rights abuses and to call for further democratic control of trade agreements.

Arbitral tribunals and trade agreements as threats to democracy and States’ sovereignty

This report underlined the lack of transparency of ISDS. These mechanisms create a privatised system of justice incompatible with the principles of independence and accountability. Furthermore, arbitral awards have mostly overridden States’ duties to protect human rights and to regulate in the public interest.

The report also highlighted a paradox: States have ratified human rights treaties while at the same time entering into trade and investment agreements that actually render the realisation of human rights impossible. For instance, in 2010 Phillip Morris was able to sue Uruguay under the Switzerland–Uruguay bilateral investment treaty claiming that the Uruguayan anti-smoking legislation aiming at protecting public health devalued its investments. To solve such issues, the expert called for the recognition that human rights norms should prevail over any other treaty, including trade agreements.

Connecting the dots: the TTIP experience

In our statement, WILPF supported the Expert’s calls for further democratic control over trade agreements and more generally, the need to restore a balance of powers between corporations and States. In particular, WILPF recalled that the experience of the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union has shown a shift in public opinion and civil society’s demands for greater transparency, public consultation and a heightened democratic oversight over the conclusion of trade agreements.

Regarding the issue of ISDS in TTIP which triggered major public outcry, the European Commission released a proposal, on 16 September, to replace ISDS with an investment court and announced a further project to create an international investment court in all future agreements entered by the EU. WILPF welcomes this positive change to reinforce independent and transparent dispute mechanisms instead of privatised, opaque and often biased mechanisms. The Commission proposal also seems to protect the legitimate right of states to regulate in the public interest notwithstanding a trade agreement. However, the notion of public interest should be further clarified and should encompass the protection of all human rights. In addition, we must remain careful as this proposal for an investment court still needs to be discussed with the European Council, the European Parliament and most importantly with the United States.

The EU is taking an important and innovative stance on this issue. However, reinstating a balance between States and transnational corporations in international trade will also require tackling the wider issue of corporate accountability and access to justice in the case of corporate human rights abuses. Hence, we call on the EU to take a similar constructive position with regards to the international treaty on Transnational Companies and other Business Enterprises and Human Rights.

Finally, the TTIP experience reminds us a lesson: important democratic change can happen under strong and focused mobilisation of civil society. Such mobilisation on the future international treaty on Transnational Corporations and Human Rights is absolutely crucial. Indeed, if successful, this initiative could structurally and universally address issues identified in the TTIP and all trade agreements and would be a game-changer for victims of corporate human rights abuses across the globe, who are currently denied effective access to justice and remedies.

If you would like to learn more about this matter, please read our previous blog, learn more about our petition and do not hesitate to contact us!